Petroleum Products To be Bought Under GST Bracket: Hasmukh Adhia

Finance Secretary Hasmukh Adhia said the all-powerful GST Council will consider bringing petroleum products under Goods and Services Tax (GST) and it could happen in phases.

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The finance ministry is on its toes to figure out any control mechanism for the ongoing petroleum based inflation situation. While the option of bringing Petroleum products under GST bracket was not gaining any interest earlier, things have changed now. Finance Secretary Hasmukh Adhia said the all-powerful GST Council will consider bringing petroleum products under Goods and Services Tax (GST) and it could happen in phases.

Speaking on the issue, Central Board of Indirect Taxes and Customs Chairman S Ramesh said although there is demand for bringing petroleum products under GST, the GST Council will have to finalize modalities.

Currently, diesel, petrol, crude oil, natural gas and aviation turbine fuel are outside the purview of goods and services tax, and states have the right to impose a value-added tax on these items.

“One of the demands that are there before us, we will see. Everything will happen in stages,” Adhia said at an event here. However, having a very smart and balanced standpoint, he indicated that the officials are carefully exploring possibilities of bringing petroleum under GST.

The civil aviation ministry has time and again voiced its concern on the high rate of taxes on aviation turbine fuel, which accounts for a significant chunk of an airline’s operational costs and also has a bearing on airfares.

Earlier, the civil aviation ministry had also written to the finance ministry seeking the inclusion of jet fuel under the indirect tax regime with full input tax credit at the earliest.

The finance ministry has expressed its intention to include natural gas and ATF within the purview of the goods and services tax soon.

“We have done a lot but that it does not mean that there is no scope for the betterment of the existing system. We still believe that we need to do a lot more and we are working in that direction,” Adhia said.

On the issue of automation of refund, he said it was meant to be automated right from day one but unfortunately people made so many mistakes in filing return that the income-tax department had to get into manual mode at the last moment.

“We are again trying to make it completely automatic, the entire refund process. This is the next thing. In terms of simplification of rates, slabs, we do understand the need for it but we did what was best in the given scenario.

“We could not have done anything other than this because we had to take care of revenue, we had to take care of concern of the poor. Certainly, we must move in that direction of something better than that,” the secretary said.

The GST currently has four slabs —5 percent, 12 percent, 18 percent and 28 percent.

The GST Council, in November, had reduced the tax rate on 178 items from 28 percent to 18 percent. However, there is a very strong opinion of some experts which says that the 28 percent of GST slab should be removed. But it only depends on time whether the policymakers will adhere to this demand or not.